2014

Global Payments Reports First Quarter Earnings for Fiscal 2013 Obtains Commitments for New Financing

Reaffirms Fiscal 2013 Outlook

ATLANTA, Sept. 27, 2012 /PRNewswire/ -- Global Payments Inc. (NYSE: GPN), a leading, worldwide provider of electronic transaction processing solutions, today announced results for its fiscal first quarter ended August 31, 2012. 

(Logo:  http://photos.prnewswire.com/prnh/20010221/ATW031LOGO )

First Quarter 2013 Summary

  • Revenue grew 9% to $590.3 million compared to $542.8 million in the first quarter of 2012.
  • Cash diluted earnings per share1 were $0.87 compared to $0.88 in the first quarter of 2012.
  • GAAP diluted earnings per share were $0.59, compared to $0.79 in the first quarter of 2012, and included processing system intrusion charges of $0.20.
  • On a constant currency basis, revenue and cash diluted earnings per share grew 12% and 3%, respectively.

Chairman and CEO Paul R. Garcia said, "We are executing on our fiscal 2013 goals and initiatives while we make steady progress on the data intrusion remediation.  We anticipate closing our two previously announced acquisitions, the remaining 44 percent ownership interest in our Asia-Pacific joint venture and the U.S. based Accelerated Payment Technologies business, in the second quarter.  These transactions support our strategy of driving long-term growth and shareholder value.  

"Also, in keeping with the company's strategy to provide comprehensive payment options to our customers, we are pleased to announce the recent signing of an agreement with Discover Financial Services to offer PayPal acceptance to our extensive U.S. merchant base," continued Mr. Garcia.

Acquisition Closings and Funding

Global Payments anticipates closing the Accelerated Payment Technologies (APT) acquisition for $413 million in October.  APT is an innovative provider of fully-integrated payment technology solutions for small to medium sized merchants.  APT markets its products and services primarily through a network of 700 value-added resellers (VARs) covering over 30 different vertical markets. In addition, the company anticipates closing the previously announced acquisition of the remaining 44% ownership interest in the Asia-Pacific joint venture for $242 million during the second quarter.

In the coming days, the company expects to close a new five-year senior unsecured term loan facility of as much as $700 million, and an increase in its existing senior unsecured revolving credit facility of as much as $150 million.  The company has received commitments from a syndicate of lenders and this new financing has been arranged by Bank of America Merrill Lynch, PNC Capital Markets and Regions Capital Markets. 

David Mangum, Senior Executive Vice President, Chief Financial Officer, stated,  "I am particularly pleased with our new financing arrangements which provide for capital flexibility to pursue our growth strategies.  This will allow us to deploy substantial capital for further organic growth, future acquisitions and on-going share repurchases."

Share Repurchase Update

Through September 26, 2012, the company repurchased 280,000 shares at an average price of $42.12 per share for a total of $11.8 million.  Under the current $150 million share repurchase authorization, $138.2 million remains available.

2013 Outlook

The company's full-year financial expectations have been updated to incorporate the anticipated closings of the two acquisitions and the new financing.

For the full-year of fiscal 2013, the company continues to expect annual revenue of $2,360 million to $2,400 million, or 7% to 9% growth over fiscal 2012.  On a partial year basis, the company expects the APT transaction to add approximately 50 basis points of incremental cash operating margin to the total company for fiscal 2013.  Annual expectations for fiscal 2013 diluted earnings per share on a cash basis remain unchanged at $3.59 to $3.66, or growth of 2% to 4% over fiscal 2012.  On a constant currency basis, the company continues to expect revenue to grow 8% to 10% and diluted earnings per share on a cash basis to grow 4% to 6%. 

Annual fiscal 2013 GAAP diluted earnings per share has been updated to include purchase price amortization related to the APT acquisition; we now anticipate the range for annual GAAP diluted earnings per share to be $2.99 to $3.06 (See Schedule 8 for more detail).    

Both cash and GAAP diluted earnings per share expectations exclude the impact of any potential future share repurchases and the full-year impact of all remediation costs.

Conference Call

Global Payments will hold a conference call today, September 27, 2012 at 5:00 p.m. EDT to discuss financial results and business highlights.  Callers may access the conference call via the investor relations page of the company's website at www.globalpaymentsinc.com by clicking the "Webcast" button; or callers in North America may dial 1-888-895-3550 and callers outside North America may dial 1-706-758-8809.  The pass code is "GPN."  A replay of the call may be accessed through the Global Payments website through October 10, 2012.   

About Global Payments

Global Payments Inc. (NYSE: GPN) is a leading provider of electronic transaction processing services for merchants, Independent Sales Organizations (ISOs), financial institutions, government agencies and multi-national corporations located throughout the United States, Canada, Europe and the Asia-Pacific region.  Global Payments, a Fortune 1000 company, offers a comprehensive line of processing solutions for credit and debit cards, business-to-business purchasing cards, gift cards, electronic check conversion and check guarantee, verification and recovery including electronic check services, as well as terminal management.  Visit www.globalpaymentsinc.com for more information about the company and its services.

This announcement and comments made by Global Payments' management during the conference call may contain certain forward-looking statements within the meaning of the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995.  Statements that are not historical facts, including revenue and earnings estimates and management's expectations regarding future events and developments, are forward-looking statements and are subject to significant risks and uncertainties.  Important factors that may cause actual events or results to differ materially from those anticipated by such forward-looking statements include the following: the effect on our results of operations of the remediation efforts resulting from the unauthorized access to our processing system announced in March 2012, and the impact on our results of operations; foreign currency risks which become increasingly relevant as we expand internationally, the effect of current domestic and worldwide economic conditions, including sovereign insolvency situations and a decline in the value of the U.S. dollar, and future performance and integration of acquisitions including APT, and other risks detailed in the company's SEC filings, including the most recently filed Form Form 10-K, as applicable.  The company undertakes no obligation to revise any of these statements to reflect future circumstances or the occurrence of unanticipated events.

1 See Schedule 2 for Cash Earnings and Schedules 6 and 7 for Reconciliations of Cash Earnings to GAAP.

Investor contact:  investor.relations@globalpay.com     

Media contact: media.relations@globalpay.com

Jane Elliott             

Kay Sharpton            

Amy Corn

770-829-8234          

770-829-8870         

770-829-8755


 

SCHEDULE 1







GAAP CONSOLIDATED STATEMENTS OF INCOME 





GLOBAL PAYMENTS INC. AND SUBSIDIARIES
















(In thousands, except per share data)




















Three Months Ended August 31,







2012


2011


% Change





(unaudited)












Revenues




$        590,287


$         542,771


9%










Operating expenses:







     Cost of service



204,391


191,536


7%

     Sales, general and administrative


281,419


242,625


16%

     Processing system intrusion


23,989


-


NM





509,799


434,161


17%










Operating income



80,488


108,610


(26%)










Other income (expense):







     Interest and other income


1,983


2,501


(21%)

     Interest and other expense


(3,545)


(4,087)


(13%)





(1,562)


(1,586)


(2%)










Income before income taxes 


78,926


107,024


(26%)

Provision for income taxes


(24,764)


(34,943)


(29%)

Net income



54,162


72,081


(25%)

Less: Net income attributable to noncontrolling interests, net of tax


(7,487)


(8,107)


(8%)

          Net income attributable to Global Payments


$          46,675


$           63,974


(27%)










Earnings per share attributable to Global Payments:







    Basic




$              0.59


$               0.80


(26%)

    Diluted




$              0.59


$               0.79


(25%)










Weighted average shares outstanding:







          Basic



78,604


80,076



          Diluted



79,043


80,831





















NM - Not Meaningful







 

 

SCHEDULE 2







CASH EARNINGS ATTRIBUTABLE TO GLOBAL PAYMENTS





GLOBAL PAYMENTS INC. AND SUBSIDIARIES














(In thousands, except per share data)
















Three Months Ended August 31,





2012


2011


% Change








Revenues


$         590,287


$       542,771


9%








Operating expenses:







     Cost of service


193,005


178,893


8%

     Sales, general and administrative


280,619


242,625


16%



473,624


421,518


12%








Operating income


116,663


121,253


(4%)








Other income (expense):







     Interest and other income


1,983


2,501


(21%)

     Interest and other expense


(3,545)


(4,087)


(13%)



(1,562)


(1,586)


(2%)








Income before income taxes 


115,101


119,667


(4%)

Provision for income taxes


(36,553)


(38,682)


(6%)

Net income


78,548


80,985


(3%)

Less: Net income attributable to noncontrolling interests, net of tax


(9,752)


(10,172)


(4%)

Net income attributable to Global Payments


$           68,796


$         70,813


(3%)















Basic earnings per share


$               0.88


$             0.88


0%








Diluted earnings per share


$               0.87


$             0.88


(1%)








Weighted average shares outstanding:







          Basic


78,604


80,076



          Diluted


79,043


80,831

















NM - Not Meaningful














See Schedule 6 for a reconciliation of cash earnings from continuing operations to GAAP.

 

 

SCHEDULE 3












SEGMENT INFORMATION












GLOBAL PAYMENTS INC. AND SUBSIDIARIES






















(In thousands)





































 Three Months Ended August 31, 












2012


2011


 % Change 








 GAAP 


 Cash Earnings 


 GAAP 


 Cash Earnings 


 GAAP 


 Cash Earnings 



















Revenues:














United States



$    345,898


$    345,898


$    287,425


$    287,425


20%


20%

Canada



80,897


80,897


91,221


91,221


(11%)


(11%)


North America merchant services


426,795


426,795


378,646


378,646


13%


13%



















Europe



128,465


128,465


129,414


129,414


(1%)


(1%)

Asia-Pacific



35,027


35,027


34,711


34,711


1%


1%


International merchant services


163,492


163,492


164,125


164,125


(0%)


(0%)





















Total revenues


$    590,287


$    590,287


$    542,771


$    542,771


9%


9%



















Operating income:














North America merchant services


$      67,217


$      71,443


$      71,758


$      74,616


(6%)


(4%)

International merchant services


57,140


65,044


55,658


65,443


3%


(1%)

Corporate1



(43,869)


(19,824)


(18,806)


(18,806)


(133%)


(5%)



Operating income


$      80,488


$    116,663


$    108,610


$    121,253


(26%)


(4%)























































1 August 31, 2012 GAAP amounts include processing system intrusion costs of $24.0 million


See Schedule 7 for reconciliation of cash earnings segment information to GAAP. 


 

 

SCHEDULE 4




CONSOLIDATED BALANCE SHEETS




GLOBAL PAYMENTS INC. AND SUBSIDIARIES








(In thousands)









August 31,


May 31,


2012


2012


(unaudited)



ASSETS




Current assets:




Cash and cash equivalents

$         841,331


$       781,275

Accounts receivable, net of allowances for doubtful accounts of $1,032 and $532, respectively

179,875


182,962

Claims receivable, net of allowance for losses of $3,784 and $3,435, respectively

1,082


1,029

Settlement processing assets

236,384


217,994

Inventory

12,839


9,864

Deferred income taxes

25,691


21,969

Prepaid expenses and other current assets

39,679


33,646

Total current assets

1,336,881


1,248,739





Goodwill

740,891


724,687

Other intangible assets, net of accumulated amortization of $251,829 and $235,296, respectively

284,625


290,188

Property and equipment, net of accumulated depreciation of $177,228 and $161,911, respectively

324,005


305,848

Deferred income taxes

96,558


97,235

Other

22,532


21,446





Total assets

$      2,805,492


$    2,688,143





LIABILITIES AND EQUITY




Current liabilities:




Lines of credit

$         209,254


$       215,391

Current portion of long-term debt

47,541


76,420

Accounts payable and accrued liabilities

300,270


316,313

Commitment to purchase redeemable noncontrolling interest

242,000


-

Settlement processing obligations

228,771


216,878

Income taxes payable

18,110


12,283

  Total current liabilities

1,045,946


837,285





Long-term debt

285,464


236,565

Deferred income taxes

124,096


106,644

Other long-term liabilities

66,966


62,306

Total liabilities

1,522,472


1,242,800





Commitments and contingencies








Redeemable noncontrolling interest

-


144,422





Equity:




Preferred stock, no par value; 5,000,000 shares authorized and none issued

-


-

Common stock, no par value; 200,000,000 shares authorized; 78,819,988 and




 78,551,297 issued and outstanding at August 31, 2012 and May 31, 2012, respectively.




Paid-in capital

258,084


358,728

Retained earnings

889,370


843,456

Accumulated other comprehensive income (loss) 

1,498


(30,000)

      Total Global Payments shareholders' equity

1,148,952


1,172,184

Noncontrolling interest

134,068


128,737

Total equity

1,283,020


1,300,921





Total liabilities and equity

$      2,805,492


$    2,688,143





 

 

SCHEDULE 5




UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

GLOBAL PAYMENTS INC. AND SUBSIDIARIES











(In thousands)















Three Months Ended August 31,





2012


2011








Cash flows from operating activities:





Net income

$               54,162


$                  72,081


Adjustments to reconcile net income to net cash used in operating activities:






Depreciation and amortization of property and equipment

12,670


11,573



Amortization of acquired intangibles

11,225


12,643



Provision for operating losses and bad debts

6,012


6,812



Share-based compensation expense

4,222


3,978



Deferred income taxes

10,273


7,831



Other, net

(941)


441


Changes in operating assets and liabilities, net of the effects of acquisitions:






Accounts receivable

3,087


(10,812)



Claims receivable

(3,272)


(4,591)



Settlement processing assets and obligations, net

(7,839)


(687,180)



Inventory

(2,992)


(2,861)



Prepaid expenses and other assets

(8,513)


2,153



Accounts payable and other accrued liabilities

(15,294)


(27,589)



Income taxes payable

5,827


9,643




Net cash provided by (used in) operating activities

68,627


(605,878)








Cash flows from investing activities:





Business, intangible and other asset acquisitions, net of cash acquired

(190)


-


Capital expenditures

(29,237)


(12,151)


Net decrease in financing receivables

740


583




Net cash used in investing activities

(28,687)


(11,568)








Cash flows from financing activities:





Net (payments) borrowings on short-term lines of credit

(6,137)


40,327


Proceeds from issuance of long-term debt

50,000


71,029


Principal payments under long-term debt

(30,080)


(44,295)


Proceeds from stock issued under employee stock plans

4,375


(2,836)


Common stock repurchased - share-based compensation plans

(6,348)


-


Tax benefit from employee share-based compensation 

1,733


1,420


Repurchase of common stock

(3,249)


(73,222)


Distribution to noncontrolling interests

(2,733)


(2,471)


Dividends paid

(1,578)


(1,613)




Net cash provided by (used in) financing activities

5,983


(11,661)








Effect of exchange rate changes on cash

14,133


(1,226)








Increase (decrease) in cash and cash equivalents

60,056


(630,333)

Cash and cash equivalents, beginning of period

781,275


1,354,285

Cash and cash equivalents, end of period

$             841,331


$                723,952








 

 

SCHEDULE 6






RECONCILIATION OF QUARTERLY CASH EARNINGS ATTRIBUTABLE TO GLOBAL PAYMENTS TO GAAP

GLOBAL PAYMENTS INC. AND SUBSIDIARIES










(In thousands, except per share data)












Three Months Ended August 31, 2012


GAAP

Processing System Intrusion

Other2

Cash Earnings Adjustments1

Cash Earnings







Revenues

$           590,287

$                -

$                  -

$                   -

$          590,287







Operating expenses:






   Cost of service

204,391

-

(161)

(11,225)

193,005

   Sales, general and administrative

281,419

-

(800)

-

280,619

   Processing system intrusion

23,989

(23,989)

-

-

-


509,799

(23,989)

(961)

(11,225)

473,624







Operating income

80,488

23,989

961

11,225

116,663







Other income (expense):






   Interest and other income

1,983

-

-

-

1,983

   Interest and other expense

(3,545)

-

-

-

(3,545)


(1,562)

-

-

-

(1,562)







Income before income taxes 

78,926

23,989

961

11,225

115,101

Provision for income taxes

(24,764)

(8,279)

(150)

(3,360)

(36,553)

Net income

54,162

15,710

811

7,865

78,548

Less: Net income attributable to noncontrolling interests, net of tax

(7,487)

-

(741)

(1,524)

(9,752)

Net income attributable to Global Payments

$             46,675

$        15,710

$                  70

$             6,341

$            68,796







Diluted shares

79,043




79,043

Diluted earnings per share

$                 0.59

$            0.20

$                  -

$               0.08

$                0.87














Three Months Ended August 31, 2011


GAAP



Cash Earnings Adjustments1

Cash Earnings







Revenues

$           542,771



$                   -

$          542,771







Operating expenses:






   Cost of service

191,536



(12,643)

178,893

   Sales, general and administrative

242,625



-

242,625


434,161



(12,643)

421,518







Operating income

108,610



12,643

121,253







Other income (expense):






   Interest and other income

2,501



-

2,501

   Interest and other expense

(4,087)



-

(4,087)


(1,586)



-

(1,586)







Income before income taxes 

107,024



12,643

119,667

Provision for income taxes

(34,943)



(3,739)

(38,682)

Net income  

72,081



8,904

80,985

Less: Net income attributable to noncontrolling interests, net of tax

(8,107)



(2,065)

(10,172)

Net income attributable to Global Payments

$             63,974



$             6,839

$            70,813







Diluted shares

80,831




80,831

Diluted earnings per share

$                 0.79

$                -

$                  -

$               0.09

$                0.88













1 Represents adjustments to cost of service to exclude acquisition intangible amortization expense from continuing operations and the related income tax benefit.







2 Represents one-time charges primarily related to employee termination benefits and the August 2012 net income attributable to our Asia-Pacific redeemable noncontrolling interest. 







We supplemented our reporting of net income and the related earnings per share information determined in accordance with GAAP by reporting net income and the related earnings per share for the three months ended August 31, 2012 and 2011 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated August 31,2012 net income and earnings per share on a cash basis by excluding costs related to the processing system intrusion, acquisition intangible amortization and one-time charges related to employee termination benefits. We also adjusted the net income attributable to noncontrolling interests to include the August 2012 net income attributable to our Asia-Pacifice redeemable noncontrolling interest. We calculated August 31, 2011 net income and earnings per share on a cash basis by excluding acquisition intangible amortization from our results. We exclude these charges in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations. Our net income and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, net income and earnings per share determined in accordance with GAAP. Our measures of net income and earnings per share on a cash earnings basis reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.

 

 

SCHEDULE 7






RECONCILIATION OF CASH EARNINGS SEGMENT INFORMATION TO GAAP


GLOBAL PAYMENTS INC. AND SUBSIDIARIES










(In thousands)

















 Three Months Ended August 31, 2012 




 GAAP 

Processing System Intrusion

Other2

Cash Earnings Adjustments1

 Cash Earnings 









Revenues:






United States

$      345,898

$                -

$                -

$                       -

$      345,898

Canada

80,897

-

-

-

80,897


North America merchant services

426,795

-

-

-

426,795









Europe

128,465

-

-

-

128,465

Asia-Pacific

35,027

-

-

-

35,027


International merchant services

163,492

-

-

-

163,492











Total revenues

$      590,287

$                -

$                -

$                       -

$      590,287









Operating income:






North America merchant services

$        67,217

$                -

$             905

$                 3,321

$        71,443

International merchant services

57,140

-

-

7,904

65,044

Corporate

(43,869)

23,989

56

-

(19,824)


Operating income

$        80,488

$        23,989

$             961

$               11,225

$      116,663




















 Three Months Ended August 31, 2011 




 GAAP 



Cash Earnings Adjustments1

 Cash Earnings 









Revenues:






United States

$      287,425



$                       -

$      287,425

Canada

91,221



-

91,221


North America merchant services

378,646



-

378,646









Europe

129,414



-

129,414

Asia-Pacific

34,711



-

34,711


International merchant services

164,125



-

164,125











Total revenues

$      542,771



$                       -

$      542,771









Operating income:






North America merchant services

$        71,758



$                 2,858

$        74,616

International merchant services

55,658



9,785

65,443

Corporate

(18,806)



-

(18,806)


Operating income

$      108,610



$               12,643

$      121,253


















1 Represents acquisition intangible amortization expense.










2 Represents one-time charges primarily related to employee termination benefits.











 

 

SCHEDULE 8







OUTLOOK SUMMARY







GLOBAL PAYMENTS INC. AND SUBSIDIARIES












(In millions, except per share data)















Fiscal 2012 Actual



Fiscal 2013 Outlook


% Change FY12








Revenue Outlook







Constant currency1

$       2,204



$2,385 to $2,425


8% to 10%

Foreign currency impact2

 NA 



($25)



Total Revenues

$       2,204



$2,360 to $2,400


7% to 9%








EPS Outlook







Constant currency1

$         3.53



 $3.67 to $3.74 


4% to 6%

Foreign currency impact2

 NA 



($0.08)



Cash EPS 

$         3.53



 $3.59 to $3.66 


2% to 4%

Acquisition-related intangibles and non-recurring items 3

(0.48)



($0.60)


25%

Processing system intrusion

(0.68)



TBD*


NM

GAAP Diluted EPS 

$         2.37



 $2.99 to $3.06 


26% to 29%

















We supplement our fiscal 2013 outlook of total revenues and earnings per share information determined in accordance with GAAP by reporting revenues and earnings per share on a "constant currency" basis in this earnings release as a measure to help evaluate performance.  We calculated revenues and earnings per share on a constant currency basis by converting our fiscal 2013 expected revenues and expenses at fiscal 2012 exchange rates.  We exclude the impact of exchange rate fluctuations in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations,and our management uses constant currency measures to evaluate the impact of operational business decisions.  Our revenues and earnings per share reported on a constant currency basis should be considered in addition to, and not as a substitute for, revenues and earnings per share determined in accordance with GAAP. Our measures of revenues and earnings per share on a constant currency basis reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.


1 Reflects current period and forecasted results on a pro forma basis as if foreign currency rates did not change from the comparable prior year period.


2 Reflects the impact of actual and forecasted changes in foreign currency rates from the comparable prior year period.


3 Fiscal 2013 reflects $0.56 of acquisition-related intangibles and $0.04 of non-recurring items. Acquisition-related intangibles accounted for $0.35 in fiscal 2012 and non-recurring items $0.13.


* Not able to accurately estimate 2013 charges for processing system intrusion, remediation, true-ups, etc. We currently anticipate that such additional costs may be $55 to $65 million in fiscal 2013 which includes $24 million recorded in first quarter fiscal 2013. We anticipate that we may receive additional insurance recoveries of up to $28 million.


NA=Not Applicable

NM=Not Meaningful

 

SOURCE Global Payments Inc.



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